Partitions must be contiguous (you cannot use two separate disk areas for a single /dev/sda2), so you will first need to move sda3 to the end of the disk, using GParted's "Move/resize" function.
|1|------sda2------| free space |-----------sda3-----------|
Afterwards, use the same function to expand sda2 into the free space in the middle:
|1|----------------------sda2-----------------------|-----------sda3-----------|
However, since sda3 is your system partition, you cannot move or resize it from the same system. You will have to boot from the Ubuntu CD instead.
Moving (or, in rare cases, resizing) partitions can cause all files to be lost – for example, if the power goes out during moving (it takes a long time to move a partition). It never causes physical damage, however.